Standards and transformation

At the occasion of the 2016 Standards Forum to be held from 26 to 29 September in Geneva, I interviewed a number of SWIFT standards experts about the content of this year's programme. As each of the four days will focus on a specific theme, my four blog posts will offer readers a sneak-preview of what people can expect to hear about.

Day 2: Transformation – Transformative programmes, initiatives and ideas are changing the way we organise our securities, payments and regulatory operations. How does the world of standards need to respond, so that our achievements and the value we created are properly used and leveraged to respond to new use cases? That is what we will put in the spotlight on day two of our Standards Forum.

1. The role of Standards in Disruption

Professor Michael Mainelli, Executive Chairman of the Z/Yen Group, will be talking about innovations, disruptive or not, in the world of standards and how we deal with them from a technological perspective. During the follow-up session, the audience will be given a chance to share their experiences and add a standards perspective to this. What can we expect to hear at these sessions?

Andrew Muir, Head of Standards Operations, SWIFT

Conceptually, I have no problem with the idea that someone could invent a better way of doing things – but for me, there are three parts to the innovation lifecycle in "our" world. For entirely understandable reasons, innovators often ignore two of them, and you will know immediately which ones they are! The first part is the invention of a new and better way of doing something. The second part is determining how this new thing will replace, superimpose itself on, or complement the present solution. The third and final part is to orchestrate the transformation from old to new. The challenges increase in scale and difficulty as the lifecycle matures, of course, and it is often left to the stewards of the "legacy" system to figure out the really difficult ones, sometimes too late to make great contributions.

There is a lot that the standards community can learn from innovators and disruptors, such as how to get a great idea off the ground, how to engage a community with positive optimism towards a solution, and how to make great ideas visible and tangible at a much earlier stage than we are used to. One of our great strengths as a community is our natural and necessary scepticism. We pride ourselves on being able to spot how an idea might need to be improved, and to contribute to community adoption discussions. Do we always bring that strength to the table in a way that is helpful and positive? Somehow, I think we need to learn the language and culture of innovation, so that we can bring our value to the innovation table in a form in which it will be instantly accessible.

The Standards community innovates constantly. We have a lot to contribute, as well as to learn – quite often we have expertise, artefacts, schemes, methodologies and capabilities already in place to accelerate the implementation process for a great new idea, and we are well connected to the operational systems and communities of the present day. Examples are everywhere – for me, the most obvious and compelling example is the vast dictionary of financial definitions that ISO 20022 represents, and how it can provide standard definitions of business terms to new project communities such as those working on Distributed Ledgers, Smart Contracts, enterprise information architectures, canonical business models and more. [Editor's note: see also next section about Business Standards in the DLT stack]

So on this subject, the Standards Forum sessions I am really looking forward to are those where we get to hear from innovators like Prof Michael Mainelli, who will be setting the scene for this and the next session (about Distributed Ledgers) in the Standards Forum on Tuesday. Also, I am hoping for lots of participation in the session, as delegates will be invited to share their own experiences – after all, the Standards Forum is a forum, where we really want to hear from everyone with a useful story to tell or advice to give.

2. Business Standards in the DLT stack

Recently, there has been a lot of talk about the Distributed Ledger Technology (DLT). Do you think of DLT as being a disruptive technology that will re-shuffle the standards landscape? Are there any business areas that might gain by adopting DLT for their standards? How do you position DLT vis-à-vis ISO 20022?

Stephen Lindsay, Head of Standards, SWIFT

DLT and Smart Contracts (SC) are technologies that have the potential to transform automation in the financial industry. Recently, we have seen a lot of progress in making these technologies comply with the financial industry's requirements for security, resilience and scalability. Of course, it takes more than just a new technology to get business partners to align processes, the meaning and usage of data, participants' roles and responsibilities, etc. Business standards are the answer!

SWIFT undertook a proof-of-concept examining the use of standards such as ISO 20022 for DLT/SC implementations using fixed-rate bonds. Our conclusion is that while existing standards do not cover all aspects of DLT/SC, there is clear value in the technology's approach and there are many potential applications for it. In any case, we should avoid 're-inventing the wheel' in terms of business definitions and facilitate interoperability of DLT implementations with existing financial industry infrastructures, including electronic messaging. As the industry evolves DLT/SC-specific standards, ISO 20022 will always provide a great foundation, in terms of both existing business content and approach. Business standards are one of the cornerstones of the ISO 20022 methodology.

3. Standards Governance and Mechanisation

Day two of the Standards Forum will end with a session about standards governance and mechanisation. Can you expand on the benefits of introducing more discipline in market practice? How can this be "mechanically" achieved? The Change Request Forum has recently been launched as part of MyStandards. How is it being picked up and are there any plans to evolve it?

Marc Delbaere, Head of MyStandards, SWIFT

I would say that there are two aspects to consider when it comes to making market practice more disciplined.

Firstly, discipline is determined by how efficient one is in defining market practice. There are business, budgetary and operational consequences associated with the decision to introduce more discipline in setting market practice. Some market practice groups have embraced this, while others are still coming to grips with it. Of course, the more formal standards are defined when they are initially developed, the better they lend themselves to further expansion in the form of market practice.

A second aspect that I would like to mention is how discipline can help to roll out market practice more efficiently and how it can ease the customer experience. If definitions are consistent, then the solution is automatable. The less ambiguity and misinterpretation there is, the greater the chance that specifications can be executed by machines and tested using tools, such as the MyStandards Readiness Portal, which offers its users testing capabilities.

This brings me to tools and how they can help us to achieve our goal. They can assist us to do impact analysis in MyStandards, with big data, to build business intelligence, etc. Structured data lend themselves perfectly to do a lot with mechanically, such as mapping between standards and even automatically integrating change requests into standards.

Finally, I would like to mention the Change Request Forum, a collaborative platform which we launched in July. Pick up has been satisfactory, although it is early days yet. By using tools like this one, we can raise the visibility of change requests by pushing them to other standardisation bodies that are also using the platform. Since market practice specifications are already part of MyStandards, the logical next step is to make market practice change requests part of the Change Request Forum. If you are a standardiser, be it at a global, regional or national level, your needs are always going to be the same. Standardising is to reach consensus on how to do things in a formal, structured way. The more rigidly you can do this from the outset, the more you can do with information downstream. 

Please also read the other blogs in this series:

1. The financial industry's landscape and roadmaps 

3. Standards and initiatives

4. Standards are more than messages